APRA released a response to the submissions paper to the consultation to apply its cross-industry Prudential Standard CPS 220 Risk Management (CPS 220) to private health insurers. APRA also released revised versions of CPS 220 and the accompanying prudential practice guide (CPG 220), which will apply to private health insurers as well as authorized deposit-taking institutions, general insurers, and life insurers from April 01, 2018. Furthermore, a revised version of Prudential Standard HPS 001 Definitions (HPS 001) has been updated and released to include the key terms contained in CPS 220. HPS 001 will also apply from April 01, 2018.
In this response paper, APRA sets out its views on the key issues raised in submissions. In summary, APRA has extended the implementation date of CPS 220 for private health insurers to April 01, 2018 and made a number of minor changes to the versions of CPS 220, CPG 220, and HPS 001. The amendments provide additional clarity about compliance with CPS 220. The consultation on CPS 220, which was launched on December 15, 2016, proposed to apply this cross-industry prudential standard to the private health insurance industry.
APRA had invited feedback on the CPS 220 and CPG 220 and received submissions from a range of stakeholders, including the two private health insurance industry associations, 12 APRA-regulated institutions, and the Actuaries Institute. The insurer submissions represented a broad cross-section of the industry (approximately 83% by market share). The consultation on CPS220 found general agreement within the private health insurance industry that adoption of the risk management standard would strengthen risk management practices and the capacity of private health insurers to identify and mitigate key risks. Application of CPS 220 to the private health insurance industry is expected to reinforce steps that private health insurers have taken in the recent years to strengthen their risk management practices and ensure that the strengthening is continued over the longer term.
Effective Date: April 01, 2018
Keywords: Asia Pacific, Australia, Insurance, CPS 220, CPG 220, Private Health Insurers, Risk Management, APRA
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